More on Closing Costs

Will there be a Seller’s concession?

A client inquired about using a charitable “down payment assistance” program like this one Partners In Charity when she buys her home.

This is a program whereby the Seller of the house must repay the charity at closing for the amount of the assisted contribution. The Seller then possibly qualifies for a tax deduction based on the charitable nature of the reimbursement (depending upon the final tax return and the personal qualifications for such. As usual: check with your tax professional.).

I have investigated several non-profit DP assistance programs similar to this one. In an “up” market as we have been experiencing for the better part of 9 years it is a tool that is really unnecessary. In the event, you would use the charitable contribution/tax deductibility as a way to convince a homeowner to provide a Seller’s concession for closing costs. In our current market in the NY Metro area, homeowners and their agents/attorneys agree to such concessions on a regular basis. In fact, I would daresay it is so common an occurrence as to be an unremarkable part of doing business every day.

When I started out, and up until around ’95-’96, many Sellers and/or their attorneys and real estate agents were reluctant to agree to concessions. The idea was not so commonly applied in those days. Back then, I would spend considerable time “selling” the idea to the other side in a real estate transaction. Nowadays the listing agents and/or attorneys usually call me first to ask, “Will there be a Seller’s concession?” It’s about as common a question as, “Would you like an apple pie with your Big Mac?”

Once you make an offer on a property, the mechanisms necessary to add your closing costs into the transaction and to provide the 100% financing you need to purchase the home automatically kick in to gear.